Section 122 Surcharge: The CAFC Stay-Ruling Window Opens (June 2, 2026 Status Update)
Section 122 Surcharge: The CAFC Stay-Ruling Window Opens (June 2, 2026 Status Update)
As of Tuesday, June 2, 2026, the 10% Section 122 balance-of-payments surcharge is still being collected on essentially every covered import entry crossing a U.S. port of entry. Nothing on the ACE entry summary has changed since the Court of International Trade ruled the surcharge unlawful on May 7. The Federal Circuit's administrative stay of May 12 remains in place, the CIT's May 20 denial of the government's stay-pending-appeal motion has not altered collection, and the statutory authority for the underlying February 24, 2026 proclamation still runs out by operation of law on July 24, 2026 — now exactly 52 days away.
What makes June 2 different from the May 27 status is timing. The Federal Circuit's ruling on the government's stay-pending-appeal motion — the next operationally significant event on the calendar — was projected to land between approximately June 5 and June 19, 2026. That window opens this week. For the first time since the May 7 decision, importers should be watching the docket on a daily basis, because the next order out of the CAFC will be the strongest signal yet about how the appeal is likely to resolve.
This update covers where the appeal sits as of June 2, why the imminent stay ruling matters more than the procedural orders that preceded it, and the concrete moves that make sense in the 52 days remaining before the statutory cliff.
The Procedural Posture as of June 2
Three court orders continue to define the legal status of every Section 122 dollar paid since February 24, 2026, and none of them has been disturbed since the May 27 update.
May 7, 2026 — CIT final judgment. A divided three-judge CIT panel held that the February 24 proclamation imposing a 10% across-the-board surcharge exceeded the authority granted by Section 122 of the Trade Act of 1974 (19 USC §2132), and entered a permanent injunction barring collection — but only against the named plaintiffs, not nationwide. The full reasoning is in the May 7 CIT decision walkthrough.
May 12, 2026 — CAFC administrative stay. The Federal Circuit entered a status-quo administrative stay suspending the CIT injunction while it considers the government's separate stay-pending-appeal motion. It is not a merits ruling; it simply lets CBP keep collecting during the briefing period. See the administrative-stay mechanics.
May 20, 2026 — CIT denies the government's stay-pending-appeal motion. The CIT declined to stay enforcement of its own judgment pending appeal, signaling that the lower court does not believe the merits factors favor the government. The practical effect on the duty line was nil because the CAFC administrative stay supersedes the CIT denial — but most trade attorneys moved their appellate-success probability estimates into the 50-55% range after the ruling.
The government's reply brief on the stay-pending-appeal motion was filed May 22, and the motion has been under submission at the Federal Circuit ever since. As of June 2, no order has issued.
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Get a Free Quote →Free, no-obligation. Reply within 24 hours.Why the Imminent CAFC Stay Ruling Matters
The two stays that came before — the May 12 administrative stay and the May 20 CIT denial — were procedural. The administrative stay was a one-paragraph status-quo order; the CIT denial was the lower court declining to pause its own judgment. Neither told importers much about how the appeal will actually come out.
The stay-pending-appeal ruling now pending at the CAFC is different. To grant or deny a stay pending appeal, the Federal Circuit must weigh the traditional four factors — likelihood of success on the merits, irreparable harm, the balance of equities, and the public interest — which means the order will necessarily telegraph how the panel views the government's chance of winning the underlying appeal.
Three outcomes remain on the table:
- CAFC grants the stay. The CIT injunction stays paused through the merits appeal and CBP continues collecting from everyone. A grant would signal the panel sees a real likelihood the government prevails on the merits — the most government-favorable read. - CAFC denies the stay. The administrative stay lifts and the CIT injunction snaps back into effect for the three named plaintiffs (still not for non-plaintiffs). A denial would signal the panel is skeptical of the government's merits position, strengthening the case for protective protests across the importer base. - CAFC fashions modified relief. Escrow arrangements, refund-deferral structures, or duty-amount caps. This complicates importer cash-flow planning without categorically changing the protest calculus.
Whatever the panel does, the order is worth reading in full the day it drops, because the language will reset the appellate-success probability that drives every protest cost-benefit decision.
The July 24 Cliff Now Drives Every Operational Decision
Whatever the CAFC does on the stay motion, the 150-day cap built into Section 122 itself runs out on July 24, 2026. Section 122 authorizes a temporary balance-of-payments surcharge but caps it at 150 days absent specific Congressional extension legislation. The February 24 proclamation started that clock; it expires by operation of law on July 24.
As of June 2, no extension legislation has been introduced in either chamber, which keeps the base case simple: the 10% Section 122 line most likely zeroes out on entries filed on or after July 25, 2026, while Section 232 (steel, aluminum, copper, autos) and Section 301 (China) duties continue unaffected because they rest on independent legal authorities. The contingency to model is a Section 232 substitute — the likeliest replacement because several underlying investigations are already complete and can be activated administratively, though a Section 232 action would typically expand specific product lists rather than maintain a uniform 10% structure. The full four-scenario breakdown is in the 60-days-to-expiration analysis.
For landed-cost planning, quote customers off the active duty stack (Section 122 still live) but run a parallel pricing view that drops the 10% line on August 1, and flag the cliff risk explicitly on any quote with a delivery window extending past July 24.
CAPE / IEEPA Refund Processing Continues at Scale
While the Section 122 appeal plays out, CBP's CAPE Phase 1 processing of IEEPA refund claims continues independently. As of late April 2026, importers and brokers had filed roughly 75,300 CAPE declarations covering more than 11.2 million individual entries, of which approximately 1.74 million entries had cleared all validations. Accepted refunds are generally issued within 60 to 90 days of declaration acceptance, absent a compliance flag.
Importers with stuck claims should work through the top 10 CAPE validation failures before resubmitting, and review the broader IEEPA refund guide to confirm eligibility. Clean entry data is the gating factor on almost every rejected declaration — duty amounts, HTS lines, and entry numbers have to reconcile exactly against the original ACE filing. Importers without a tidy line-level duty dataset often turn to landed-cost and duty-classification software such as Zonos to reconstruct the duty breakdown by entry before filing. (Disclosure: this is an affiliate link — FreightFigures may earn a commission if you sign up, at no additional cost to you. See our full affiliate disclosure.) For high-value refund positions, a licensed customs broker who already holds your entry history is usually the faster path.
Operational Checklist for June
The next eight weeks are about protecting refund rights on entries already paid and minimizing duty exposure on entries still to come.
1. Watch the CAFC docket daily. The stay-pending-appeal ruling is expected within the June 5-19 window. Read the order in full the day it issues and reset your protest probability assumptions accordingly.
2. Protect refund rights on every Section 122 entry. The 180-day post-liquidation protest window under 19 USC §1514 runs from each entry's liquidation date and is independent of the appeal. Know the projected liquidation date and protest deadline for every Section 122 entry filed since February 24, and file protests now on entries that have already liquidated while volume is manageable. The protest-filing guide for non-plaintiff importers walks through the mechanics.
3. Run protest cost-benefit math at current probabilities. With appellate-success estimates in the 50-55% range, set a per-entry duty value threshold (commonly $200 to $500) and file protests on every entry above it; batch the lower-value entries when broker capacity allows.
4. Time entries against the cliff where possible. If the surcharge expires on schedule, entries filed on or after July 25 escape the 10% layer entirely. On a 40-foot container of $200,000 entered value, that is $20,000 — enough to justify a sailing-schedule or entry-timing adjustment on borderline shipments.
5. Use bonded storage for inventory landing near the cliff. A U.S. Customs Bonded Warehouse lets you defer duty until withdrawal for consumption. Goods landed in mid-July and held in bond until August 1 could withdraw post-cliff at the lower duty stack if Section 122 expires on schedule. For high-value imports landing in the final two weeks before the cliff, the duty-deferral arithmetic of bonded storage often beats the storage cost.
The Bottom Line
Section 122 collection continues today, 26 days after the CIT ruling that found the surcharge unlawful. The Federal Circuit's stay-pending-appeal ruling — the first order that will actually signal how the merits appeal is likely to resolve — is expected within the next two weeks. And the statutory authority expires by operation of law on July 24 regardless of what the appellate court does. The most likely path remains expiration on the cliff, with the refund question for already-paid entries fought out through the protest-and-litigation pipeline over the next 12 to 24 months.
Run your back office as if the surcharge is alive — because today it is — but make sure your model, your protest queue, and your bonded-storage relationships are ready for the cliff. Use the Duty & Tariff Calculator to see how the duty stack changes when the 10% line drops, and the Landed Cost Calculator to translate that change into per-unit cost impact.
If you are weighing cliff-timing strategy — bonded storage, entry timing, or refund preservation on a U.S. East Coast import program — the team at Cate Freight runs a U.S. Customs Bonded warehouse at the Port of Charleston with 30+ years of import operations experience and can quote both freight and bonded storage. Start a conversation through the quote form — it is free and there is no obligation.
Frequently Asked Questions
Common questions about section 122 surcharge
Is Section 122 still being collected as of June 2, 2026?
Yes. CBP continues to assess the 10% Section 122 surcharge on every covered entry. The May 7 CIT ruling that found the surcharge unlawful was stayed by the Federal Circuit on May 12, and that administrative stay remains in place. The CIT's May 20 denial of the government's stay-pending-appeal motion did not change collection because the CAFC stay supersedes it. Nothing on the duty line has changed since February 24, 2026.
When is the CAFC expected to rule on the stay-pending-appeal motion?
The government's reply brief was filed May 22, 2026, and the motion has been under submission since. Based on historical Federal Circuit trade-case timing, a ruling is most likely between approximately June 5 and June 19, 2026 — a window that opens this week. That order is the next operationally significant date because, unlike the procedural stays that preceded it, a stay-pending-appeal ruling requires the panel to weigh the merits, so it will signal how the underlying appeal is likely to resolve.
When does Section 122 expire by statute?
July 24, 2026. Section 122 of the Trade Act of 1974 (19 USC §2132) caps a presidential balance-of-payments surcharge at 150 days unless Congress extends it through specific legislation. The February 24, 2026 proclamation started the 150-day clock, which runs out on July 24 by operation of law. As of June 2, no extension legislation has been introduced, so the base case is that the 10% line zeroes out on entries filed on or after July 25, 2026.
What should non-plaintiff importers do right now?
Protect refund rights on every Section 122 entry. The 180-day protest window under 19 USC §1514 runs from each entry's liquidation date and is independent of the appeal. Know your liquidation and protest deadlines, file protests now on already-liquidated entries above a per-entry duty value threshold (commonly $200 to $500), and batch lower-value entries when broker capacity allows. Also model both the cliff and post-cliff duty stack, and use bonded storage to defer duty on inventory landing near July 24.
How are IEEPA refunds progressing?
CBP's CAPE Phase 1 processing continues independently of the Section 122 appeal. As of late April 2026, roughly 75,300 CAPE declarations had been filed covering more than 11.2 million entries, with approximately 1.74 million entries cleared through all validations. Accepted refunds are generally issued within 60 to 90 days of acceptance, absent a compliance flag. Importers with stuck claims should work through the common CAPE validation failures before resubmitting, since clean line-level entry data is the gating factor on almost every rejection.